Enzo Biochem, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

Discontinued Operations

6 Months Ended

Jan. 31, 2024

Note 2 - Discontinued operations

Prior to July 24, 2023, we operated a clinical laboratory, doing business as Enzo Clinical Labs, which provided reference, molecular and esoteric diagnostic medical testing services in the New York, New Jersey, and Connecticut medical communities. Effective July 24, 2023, we completed the sale of certain assets used in the operation of Enzo Clinical Labs and the assignment of certain clinical lab liabilities to Labcorp for an aggregate purchase price of $113.25 million in cash, subject to customary closing adjustments. In connection with the sale, $5 million of escrowed proceeds were included in prepaid and other assets as of January 31, 2024 and in other assets as of July 31, 2023. Excluded from the sale of the clinical services assets were its cash and accounts receivable. In accordance with the sale, we ceased our clinical services operations but continue winding down activities. As a consequence of the sale, for the three and six months ended January 31, 2024 and 2023 we have classified as discontinued operations all income and expenses attributable to the clinical services business.

The following table sets forth the condensed operating results of the discontinued operations for the three and six months ended January 31:

	Three Months Ended January 31						Six Months Ended January 31
	2024			2023			2024			2023
Net revenues		—		$	8,824			—		$	19,997
Cost of revenues	$	175			10,463			—			20,545
Selling, general and administrative		813			6,382		$	2,250			12,397
Research and development		—			306			—			603
Legal and related expenses		(41	)		107			—			171
Other expense (income)		1,251			(6	)		889			(9	)
Loss from discontinued operations	$	(2,198	)	$	(8,428	)	$	(3,139	)	$	(13,710	)

Other expense for the three months ended January 31, 2024 is primarily the cost for a third party to maintain and destroy health records according to statute related to the discontinued operations.

The following table sets forth the condensed carrying amounts of major classes of assets and liabilities of the discontinued operations as of the dates indicated:

	January 31, 2024		July 31, 2023
Carrying amounts of major current assets included as part of discontinued operations:
Trade receivables	$	182	$	1,675
Prepaid and other current		5		54
Total current assets		187		1,729

Carrying amounts of major current liabilities included as part of discontinued operations:
Trade payables and accrued liabilities		10,513		20,616
Operating lease liabilities and other		1,951		2,215
Total current liabilities		12,464		22,831

Current liabilities of discontinued operations, net		12,277		21,102

Carrying amount of major non-current assets included as part of discontinued operations:
Right of use assets	$	6,104	$	7,001
Other		80		62
Total non-current assets		6,184		7,063

Carrying amount of major non-current liabilities included as part of discontinued operations:
Operating lease liabilities and other		4,696		6,096

Non-current assets of discontinued operations, net	$	1,488	$	967

During the six months ended January 31, 2024, the cash used in operating and investing activities of the discontinued operations was $11,304 and $0, respectively, primarily for reductions of trade payables and accrued liabilities, partially offset by collections of accounts receivable, and the period loss. During the six months ended January 31, 2023, the cash used in operating activities and investing activities of the discontinued operations was $8,043 and $441, respectively.